REP
ELECTRONICALLY REPRINTED FROM SEPTEMBER 2013
Secret
Weapon
The
Moving to another firm can be like entering a
war zone—the biggest threat being client casualties.
The most successful firms are those that help
advisors hang on to clients through the transition.
Advisors David O’Block and Ed Opat had just started the process of
moving their practice from LPL Financial to Cambridge Investment
Research when one of their assistants, a central player on their transition
team, abruptly left the firm to be a stay-at-home mom. That put the
Murrysville, Pa., advisors in a bind.
“She was the primary person that had gone through a lot of the
classes, the online training, etc.,” Opat says. “We were short on our crack
staff, and we had to end up doing a lot of things on our own.”
Turns out, there was a lot to do. Their firm, Equity Advisor Group,
has well over 1,000 clients that had to be repapered, one by one. As when
any advisor moves to a new firm, each client had to be contacted and
convinced to open a new brokerage account with the new firm by filling
out an Automated Customer Account Transfer Service (ACATS) form,
as well as other layers of paperwork.
While recruiting firms tout their best-in-class technology, platform
integration, compliance assistance and practice management tools, the
real secret weapon to winning over advisors may be helping ensure
clients will be coming with their advisors.
Cambridge immediately sent two people to Equity Advisor Group
to help. Ninety days later, O’Block and Opat transferred over 97 percent
of their clients’ assets. They now have over $100 million in AUM.
This process used to be easier: Advisors were able to simply notify
clients they were switching firms and, except for those clients who proactively opted out, the accounts were transferred en bloc. But in 2004,
the NASD, now FINRA, said that negative response letters could only be
used if issued by the transferring firm.
“Reps are scared to death that they’re not going to get all their clients
switched over,” says Jonathan Henschen, president of the recruiting firm
Henschen & Associates in Marine on St. Croix, Minn. “If you’re moving
and losing a third of your book, what-have-you, then you’re having to
rebuild. And they don’t want to do that. They want to move what they
have and build on top of that.”
If You Leave, Will They (Really) Come?
Many advisors underestimate the complexity of moving over their
book of business. The median advisor transferring firms retain
between half and three-quarters of clients; only 4 percent keep 100
percent, according to an Aite Group survey of advisors who had transitioned within the last ten years. One-third of advisors admitted that
retaining clients was a challenge; an equal number retained less than
half their book.
Those numbers were top of mind for financial advisor Leasha
Flammio-Watson in Melbourne, Fla., who jumped from Wells Fargo
Advisors to Ameriprise Financial in March.
“Transition support was definitely one of the top two qualifiers
because moving your book from one firm to another is like entering
a war zone,” she says. “You’re battling other advisors—some of which
you’ve considered friends—for your client relationships. So the more
people you have on your side and protecting you, the better your transition will be.”
She was wary of firms that would simply pull a pre-made transition
plan off the shelf. She wanted a firm that would customize the process,
and put boots on the ground—including a few pairs in her office.
For her first week with the firm, she had a team of four from
Ameriprise sharing her workspace and going through her protocol
spreadsheets with a fine-tooth comb, freeing her up to hit the phones.
She left Wells Fargo with $85 million in assets, and 90 days later, held
onto 90 percent of it.
“In all of the other firms I spoke to, no one was willing to give me
that kind of manpower,” Flammio-Watson said.
While the notion exists that clients are loyal to advisors, not firms,
successful client transitions are not always a given. Clients are stickier
these days, especially at the bank-owned firms, says Ron Edde, president and director of recruiting at Millennium Career Advisors.
“A client often has their mortgage there; they’ve got their checking
Photo: Marco Rosario Venturini Autieri/Getty Images
By Diana Britton
RECRUITMENT
WARS
Help Me Take My Clients!
Here are the largest IBDs that participated in
REP.'s 2013 survey, ranked by advisor satisfaction with their firm's transition support, and
their corresponding recruiting numbers.
Top IBDs *Rating of B/D's Net Gain in
Transition/On-Advisors
boarding support 2013 (YTD)
Cambridge Investment Research, Inc.
9.6
159
Commonwealth Financial Network
9.6
38
Raymond James Financial Services
9.1
62
Securities America
9.1
46
NFP Advisor Services Group
9.1
14
Sagepoint Financial
8.9
13
Woodbury Financial Services
8.6
-10
Cetera Advisors
8.5
-1
FSC Securities
8.1
6
LPL Financial
7.4
117
*On a scale of 1–10, 10 being the best Source: REP.'s IBD Report Card 2013, Meridian-IQ
account there. And because of those relationships with the firm, the
company stationery becomes almost as important as the advisor,” he
says.
An Ace Up the B/D Sleeve
“The most successful financial firms right now, in the area of recruiting, are emphasizing investment in transition resources to assist advisors in bringing their clients over, both in logistics and in actual bootson-the-ground support,” says Edde.
Ameriprise, for example, is in the top 10 firms with the most
recruits for the first seven months of 2013, with 212 new advisors,
according to Meridian-IQ. It also brings over a weighted average of 90
percent of client assets per advisor.
One way they do this is by offering incentives not just to the advisor, but to the transition staff. If the advisor hits certain milestones in
bringing their book over, the firm’s field leaders—branch managers or
“Transition support was
definitely one of the top two
qualifiers because moving
your book from one firm to
another is like entering a war
zone. You’re battling other
advisors—some of which you’ve
considered friends—for your
client relationships.”
field vice presidents—are rewarded too.
Ameriprise employs a transition team of 16 people who go out
in the field and serve as an advisor’s support desk, says Manish Dave,
senior vice president of business development. There is a 250-step
checklist that the team goes through starting before the advisor officially joins Ameriprise.
Cambridge also has had a good recruitment year, attracting 186
new advisors and $37.5 million to its platform.
Cambridge does an assessment of where the advisor is coming
from and creates a customized plan, says Amy Webber, president and
chief operating officer.
Advisors who joined the firm in 2013 had a combined $950 million
in client assets before their transitions. Today that figure is slightly over
$1 billion, (taking into account market appreciation of assets that came
over in a transition), says Kyle Selberg, senior vice president of business
development at Cambridge.
Prospera is also known for its transition process. The Texas-based
IBD just recently launched an online program for advisors going
independent, says Tarah Carlow, vice president of marketing and new
business development. The program takes advisors through a checklist
of items to accomplish during the process.
The firm will fill out all the necessary paperwork—ACATS forms,
fee-based business forms, direct business forms—and either send it to
the advisor’s office or directly to the clients. For the first week or two,
the firm also sends one or two home-office employees to the advisor’s
office. On average, Prospera recruits retain 80 percent of client AUM.
“Every single practice we’ve talked to has a fear of transition,”
Carlow adds. “And rightly so; it’s starting over in many cases.”
Selective advisors choose Cambridge. Contact Kyle Selberg, Senior Vice President of Business Development,
and the Cambridge Team ([email protected]) at 877-688-BDOY (877-688-2369).
www.joincambridge.com
877-688-BDOY (877-688-2369)
Cambridge Investment Research, Inc.
www.joincambridge.com
1776 Pleasant Plain Road
Fairfield, Iowa 52556
FOR BROKER-DEALER USE ONLY | MEMBER FINRA/SIPC
Posted with permission from REP. magazine, Penton Media, Inc. Copyright 2013. All rights reserved.
For more information on the use of this content, contact Wright’s Media at 877-652-5295
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